Tags: interest rates | higher | Federal Reserve | borrowing

Financial Pros: Interest Rates Headed Higher

By    |   Tuesday, 04 February 2014 11:36 AM

While Treasury yields have confounded conventional wisdom so far this year by falling, many financial market pros think yields will ultimately rise this year, as the Federal Reserve continues tapering its quantitative easing and economic growth stays buoyant.

The 10-year Treasury yield stood at 2.62 percent Tuesday, after dropping to a two-month low of 2.57 percent Monday. The yield ended 2013 at 3.03 percent.

The emerging market turmoil and several weak economic reports have driven rates lower. But many think it won't last.

Editor’s Note:
Secret ‘250% Calendar’ Exposed — Free Video

"I think an interest-rate rise looks pretty inevitable at this point, with tapering now on track," John Napolitano, CEO of U.S. Wealth Management, told CNBC.

David Blanchett, head of retirement research for Morningstar, put it to CNBC like this: "I think everyone agrees that rates will creep up over time. The only question is when and how much."

With the Fed keeping short-term interest rates near zero, even as it cuts back on its purchases of long-term bonds, Napolitano and Blanchett agreed that you should opt for short-term bonds over long-term bonds.

"Keeping maturities shorter than five years will dampen volatility as rates rise," Napolitano said.

After Treasury yields dove Monday on news of a slowdown in manufacturing, George Goncalves, head of interest-rate strategy at Nomura Holdings, told Bloomberg, "With the data we are getting, it's not clear whether growth is sustainable or stable. Things aren't horrible, but they are not that good, either."

Editor’s Note: Secret ‘250% Calendar’ Exposed — Free Video

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While Treasury yields have confounded conventional wisdom so far this year by falling, many financial market pros think yields will ultimately rise this year, as the Federal Reserve continues tapering its quantitative easing and economic growth stays buoyant.
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2014-36-04
Tuesday, 04 February 2014 11:36 AM
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